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Monday, January 24, 2011

Comcast Corp.'s top strategists knew months ago that success in acquiring NBC Universal, despite the objections of a bevy of powerful opponents, rested with the little-known but lyrically named Mignon Clyburn.

The 48-year-old Clyburn, a Democrat, daughter of a South Carolina congressman and the former owner-publisher of a weekly magazine, joined the Federal Communications Commission in 2009 and was one of the five commission members who would decide if Comcast could assume NBCU in a blockbuster, $30 billion deal.

The Comcast lobbyists, led by executive vice president David Cohen, studied the FCC members the way NFL coaches prep for the college draft. Clyburn, they decided, held the key vote, so they courted her with plans and promises meant to convince her that the new Comcast conglomerate would be a gentle giant.

And it worked.

Early last week, Clyburn cast the final 'yes' for the deal that will transform the nation's largest cable distributor, Comcast, into a $50 billion media giant with movie studios, an over-the-air TV network, and cable channels.

With her vote, Comcast crossed the finish line on more than a year of heated lobbying for a deal that many thought was unwise and would create a cable-distribution and programming company that could dominate the emerging multimedia universe and hurt competitors and consumers alike.

Comcast was not preordained to prevail in its pursuit of NBCU. But it toughed out a victory over opposition that seemed, in the end, fragmented and overwhelmed - and willing to concede with grudging admiration what the company had accomplished on the Washington battleground.

"They did a great job," said Charles Herring, president of Wealth TV cable channel in San Diego. "I think it's good for Comcast. I would be thrilled if I was a Comcast shareholder. My concern is that I think it will shut out independent programmers."

Andrew Jay Schwartzman, president of the nonprofit Media Access Project, which opposed the merger, said it was a "textbook case of lobbying on Capitol Hill and at the federal regulatory agencies."

"Clearly Brian Roberts was willing to spend whatever it took to get this done," Schwartzman said, noting that he believed that Comcast "spent extravagantly and wisely."

The regulatory approvals came with conditions that are expected to limit Comcast's market power in the pay-TV industry and online video. Even here, Comcast did fine. Wall Street feared that the agencies would place so many restrictions on Comcast that it would not make sense to even do the deal for NBCU.

But the analysts' consensus in the days immediately following the approval was that the provisions wouldn't change the way Comcast does business.

"A year later . . . less than feared," wrote Bank of America Corp. analyst Jessica Reif Cohen.

"Concessions are complex but better than expected, in our view," said Marci Ryvicker of Wells Fargo Securities L.L.C.

Comcast's stock price rose 3.6 percent in the days after the government approvals, closing Friday at $23.53.

Bloggers have seized on a Comcast disclosure in 2010 that it had spent about $100 million on NBCU-related expenses, attributing most of that to lobbying. But Comcast says the $100 million includes many other costs, such as legal and financing fees related to the transaction.

There is no question that Comcast has deep pockets and an almost-unmatched influence with elected officials, many of whom it has helped financially with campaign contributions.

But just as important, say those who followed the merger review, was how Comcast pushed the process forward and did its homework. It reached deals with those it needed and neutralized the opposition.

Said one FCC staffer: "They left no stone unturned. They dotted a million i's and crossed a million t's even before they came here."

Clyburn, the sole African American on the FCC, is a critical case in point.

Comcast really needed her vote, and knew it. That's because the two pro-business Republican commissioners, Robert M. McDowell and Meredith Attwell Baker, would likely vote for the merger. And so would Julius Genachowski, the Democratic chairman of the FCC.

But a 3-2 vote, with Clyburn and the fifth FCC commissioner, Democrat Michael J. Copps, voting "no," would not display bipartisan support and would be politically awkward for Genachowski.

Comcast bosses, say industry sources, made this parsing early, and began to court Clyburn.

One issue important to her was diversity.

Months before a final vote, Comcast reached agreements with Asian, Hispanic, and African American civil rights groups, agreeing to create high-level diversity councils at the company, add a Hispanic director on the Comcast board, and expand minority hiring.

Comcast did not stop there. It agreed it would add cable channels either owned by minorities or that targeted minority audiences, to its cable system, with 23 million subscribers.

In the final days of the review, Comcast conceded to a last-minute request by Clyburn to add protections for small cable operators that said Comcast would force them to pay high programming costs for NBCU content.

The wooing paid off. The final FCC vote was 4-1, with only Copps - steadfastly opposed all along - saying no.

Clyburn said in a statement Friday that she initially viewed the Comcast-NBCU transaction "with some skepticism."

"But after countless hours of review, I concluded that the companies went a long way toward addressing each and every one of my concerns," Clyburn said. She said she was convinced "that Comcast was sincere about ensuring that this merger would be in the public interest."

Cohen was understandably pleased with the government's merger review. He, along with a team that included executives Kathryn Zachem, Joseph Waz, and Melissa Maxfield, were the lead players in the review.

Comcast had a plan - though no written playbook - even before the actual announcement of Comcast's intentions to acquire a controlling stake in NBCU in December 2009, Cohen said.

"I don't think it was anything great we did here," Cohen said. "We had a compelling transaction, and we were consistent in articulating our vision." The company, he said, did not take "the bait that was often thrown up to get us into a tit-for-tat."

The company was sensitive to the concerns of FCC commissioners. Cohen noted that Comcast tried to persuade Copps to approve the merger with promises to preserve the editorial independence of NBC News and expand children's TV programming.

"I was going for five votes," Cohen said.

As for the civil rights agreements, they "were designed not just to get Mignon Clyburn's vote," Cohen said. "They were designed to support momentum around the transaction so all the commissioners could vote for the deal," he said.

Matthew Polka, president of the American Cable Association, a trade association of small cable operators, said he was thankful for Clyburn's help with concessions in the final days of the merger review.

"Comcast put a lot of resources behind this - in lobbying and everything else," Polka said. "And that was something that the rest of us didn't have."

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The CUNY Murphy Institute for Worker Education and Labor Studies

Check out the labor classes available at the CUNY Murphy Institute for Worker Education and Labor Studies. There is a joint CUNY/Cornell Certificate in Employee Labor Relations program, and undergraduate Union Semester program and the MA in Labor Studies program that I finished in June 2011 . See the info at: http://www.workered.org/

The East Coast Council handles production of low-budget feature films, defined as $8 million and below. The Council represents all below-the-line production locals within the IATSE (camera, hair, makeup, props, electricians, etc.) They take a flexible approach to the crewing of productions, by reducing member wages and benefits based on deferment.

For more information about the East Coast Council, contact either of its co-chairmen, Local 600 Eastern Regional Director Chaim Kantor (212-647-7300) or Local 52 President John Ford (212-399-0980).